Could Australia be Britain’s best Brexit friend? (Off the pitch, that is)
ASENIOR POLITICAL CORRESPONDENT sking a passionate Australian rugby fan to help the “Poms”, especially after England trounced the Wallabies 3-0 in the series in June, would be likely to elicit an unprintably pithy response.
But Steven Ciobo, a sports fan and Australia’s trade minister, will land in London this week offering to do everything he can to help Britain make a success of life outside the European Union. As a gesture of Australia’s good intent, the Canberra government will offer to lend Britain some of its expert trade negotiators.
Australia is used to negotiating its own trading deals, but there is a dire shortage of these specialists in Britain as all deals affecting the UK have been negotiated by officials in Brussels for decades. Mr Ciobo sees a way forward.
“After the most recent 3-0 thrashing of the Wallabies, I’m prepared to trade some trade negotiators for some additional Lions’ knowledge and knowhow,” Mr Ciobo says.
This week, he will hold his first faceto-face talks with Liam Fox, the International Trade Secretary, about forging a landmark free commerce deal between the two sporting rivals. Dr Fox plans a return visit in the near future.
The mood music is undeniably upbeat between Theresa May’s Government and the Australian administration of Malcolm Turnbull – the pair will hold their first meeting about the deal tomorrow.
But why is such a pact significant for Britain? What would it involve and what would it mean for the UK’s future outside the EU? The first hurdle for any UK-Australia agreement, as Mr Ciobo has already been warned, is that Britain is legally banned from signing new free trade agreements while still a member of the EU.
Australia – and other countries – will also want to wait to see how good an exit deal Britain gets from Brussels and what kind of access the UK will have to the European single market before signing on the dotted line.
However, a senior British source said Downing Street is determined to prearrange as many trade deals as possible, ready to be signed as soon as the UK leaves the EU. “We want to have as many of these deals lined up ready to sign on day one of Brexit as we can,” the source says. “We hope Australia will just be the first.”
The next step after Brexit is likely to be for Britain to join the World Trade Organisation in its own right, said Dr Steve Davies, an economic historian from the Institute of Economic Affairs (IEA), a think tank. Currently, Britain is represented there by the EU. As a full, independent member of the WTO, Britain will be able to strike formal trade deals with other individual members, such as Australia.
Then, it will be a matter of identifying the preferential trade arrangements that Britain and Australia want with each other, removing barriers to commerce and cutting tariffs.
Mr Ciobo said he believes there is scope for a possible deal involving financial services, such as banking, which is key to both the British and Australian economies, as well as financial technology companies.
Other possibilities could include deals on the trade of meat from Australian farms, giving British consumers a cheaper supply of beef, veal and lamb. Minerals such as iron ore, used in steel production, are also a key export for Australia.
For Britain, Australia would offer a potentially growing market for the export of manufactured goods and financial services, such as banking and insurance, according to Dr Davies.
However, once the broad outlines of trade have been agreed, Dr Fox, Mr Ciobo and their teams will have to discuss the fine print of the regulations for the goods and services that are likely to be covered by the pact.
For example, the laws governing the rearing of livestock would need to be judged to be equivalent between the two countries in order for the deal to cover meat exports, as would financial regulation systems for banking or insurance services.
This process of “harmonising” regulations between different countries is typically long and complex, which is one reason why ministers are keen to work with a country such as Australia, where the political and legal culture is very similar to Britain.
According to Mr Ciobo, Australia also offers the UK “a terrific launch pad” for businesses wanting to expand into Asian countries, which are among the fastest-growing economies in the world.
“We know that over the next decade or so there will be around three billion people that will constitute the Asian middle class,” he says. “We have seen growth rates across the region consistently at between five and 10 per cent for many Asian countries.
“Australia is well placed to provide a platform into those economies, as a country with historical Western ties yet sitting firmly in the Asian time zone.”
Perhaps most significantly in the short term, the prospect of a deal with Australia is hugely symbolic for Mrs May’s new Conservative Government.
Dr Fox, a Brexit campaigner, is thought to regard a free-trade agreement with Australia as a prize symbol of Britain’s global intentions, showing the Government’s willingness to look to do business on the other side of the world.
“The talks with Australia demonstrate that we want to expand our trade with the markets that are most like us, rather than the ones that are nearest to us,” a government source says. “We don’t need to be limited to trading with partners who are next door any more.”
Commonwealth countries such as Australia and New Zealand are particularly well placed for deals with Britain: they share the same language and have similar legal systems and political structures.
At the G20 meeting, Mrs May will also hold talks with Narendra Modi, the Indian prime minister – Dr Fox visited India last week. According to Dr Davies, these moves suggest Mrs May’s team could be planning to prioritise the Commonwealth countries for the first round of free trade deals after Brexit.
Mr Ciobo agrees the historic links between Britain and Australia are key.
‘I’m prepared to trade some trade negotiators for some additional Lions’ knowledge and know-how’